Will We Start Seeing Ads on Netflix?

Netflix Inc. (NASDAQ: NFLX) shares saw a handy gain in Monday’s session after it was announced that the online streamer might start advertising other shows on its platform. Instead of breaking up an episode of a show users are watching like we see with commercials on cable TV, Netflix intends to insert these ads between episodes when the credits are playing.

In the past, Netflix has been known to suggest content to viewers and even tests the responses from the users. However, this was not during episodes and most users can browse what’s trending on Netflix on their homepages.

Ultimately, Netflix is testing whether inserting recommendations between episodes will help members discover new content that they will enjoy faster. Netflix was also quick to point out that a member is able to skip a video preview at any time if they are not interested.

At Netflix, we conduct hundreds of tests every year so we can better understand what helps members more easily find something great to watch. A couple of years ago, we introduced video previews to the TV experience, because we saw that it significantly cut the time members spend browsing and helped them find something they would enjoy watching even faster. Since then, we have been experimenting even more with video based on personalized recommendations for shows and movies on the service or coming shortly, and continue to learn from our members.

Shares of Netflix were last seen up about 3% at $326.60 on Monday, with a consensus analyst price target of $377.38 and a 52-week trading range of $164.23 to $423.21.